New issues may be about to pick up pace

CBS.MarketWatch.com

NEW YORK (CBS.MW) -- With the interest-rate wait nearly over, the market for initial public offerings may start to pick up this week, halting its recent lull.

New! Smart Edgar

Only one deal, from Sequoia Software, debuted last week. As many as eight deals may be priced this week, although postponements are possible, depending on market conditions.

The IPO market has been on the ropes since late March, when interest-rate fears and a glut of deals put the brakes on a robust start to the year.

"This week, the IPO market should be considerably busier than it has been recently," said Renaissance Capital in its IPO forecast. Renaissance, which runs an IPO fund
IPOSX, -1.40%
is watching NewFocus
"
as the fiber-optic components maker readies an $86 million IPO with CS First Boston.

US Unwired
unwr
is plotting a debut during the early part of this week. The provider of wireless communications in Louisiana and Texas has hopes of generating $138 million in proceeds with lead underwriter Donaldson, Lufkin & Jenrette.

Other IPOs in the spotlight include flat-panel-display chipmaker Pixelworks
"
as well as IBeam
ibem
which broadcasts video over the Internet.

With the Federal Open Market Committee's meeting on monetary policy set for Tuesday, the IPO market may see a bump-up once a decision on interest rates has been reached. Max G. Ansbacher, chairman of Ansbacher Investment Management, pointed out that rallies among Internet stocks usually follow Fed rate hikes.

And that could boost the fate of IPOs, many of which come from the beaten-down tech and Internet sectors.

Wit, E-Trade in IPO pact

Wit Capital Group
witc
said Monday it's buying E-Trade's
EGRP, +0.53%
IPO-distribution unit as part of an alliance that turns Wit into the IPO access provider for E-Trade.

As part of the deal, E-Trade said that shareholders in its E-Offering unit will receive 32 million Wit Capital shares, representing about a 25 percent stake in the company. See full story.

Monsanto

Monsanto
MON, -0.51%
filed for a $100 million initial public offering as part of its merger last year with Pharmacia & Upjohn
PHA, +0.99%
Terms of the deal stipulated that Monsanto could spin off part of its agricultural business.

The company bills itself as a global provider of technology-based offerings and agricultural products for growers, grain processors and consumers. Its leading product is Roundup, a weed killer.

The company rang up $150 million in profit on $5.2 billion in sales last year.

Sequoia Software fell 13 percent in its second day of trading, sliding 1 5/16 to 8 3/4, after gaining 26 percent in its Friday kickoff. On its opening day, the company's shares closed at 10 1/16, down slightly from its open of 10 1/4 but well above the offering price of $8 per share.

The company is a member of Chicago-based incubator Divine InterVentures' so-called Internet zaibatsu. Divine
dvin
itself plans an initial stock offering in the near future. See archived story.

Columbia, Md.-based Sequoia offered 4.2 million shares with Lehman Bros. as lead underwriter.

"We're extremely pleased with the reception we got, given the environment," said CEO Richard C. Faint Jr. Sequoia became the only IPO to debut last week as the new-issues market waited out a lull.

In a sign of the tough environment for new stocks, Sequoia trimmed its price twice. On April 14, it cut its estimate range to $9 to $11 per share, down from $11 to $13.On April 19, the company ratcheted its planned level down again, to $8 to $10.

Sequoia's Faint said investors "saw we were a different story" because of the company's position in the growing market for XML products, providing the impetus for Sequoia to plow its way to Wall Street.

"We're using XML that's unique in the marketplace and complimentary to others in the market," he said.

Despite the harsh climate, Faint said the company was ready to go public.

"An IPO is an event in a company's history that launches you onto other and expectedly greater things," Faint said. "You do it when it's right for the business and when the market is willing to confirm your business model. The fact that, in this very tough environment, we've been able to do an IPO within the transaction price, within the range and with the full share count is a confirmation of that."

Ten customers accounted for 73 percent of Sequoia's revenue in the year ended Dec. 31. Blue Cross/Blue Shield of Minnesota accounted for 23.8 percent of its revenue, and the the state of Texas accounted for 12.2 percent, according to the company's prospectus.

It rang up $48.6 million in pro forma revenue and a loss of $300,000 last year.

Other managing underwriters on the deal are S.G. Cowen, Wit SoundView and Fidelity Capital Markets.

On and off

Farpoint Communications filed for a $230 million initial public offering with underwriter Salomon Smith Barney, while Internet-content firm Total Sports had its pass to the stock market intercepted by market conditions.

Total Sports
tspt
which operates more than 100 sports-centric sites, had filed in November to raise $50 million in its IPO, said it felt conditions made an offering unadvisable. "We will continue to evaluate the situation as market conditions change," Chief Executive Frank A. Daniels III said in a new release.

The Charlotte, N.C.-based Farpoint
FRPT, -1.25%
sells voice, data and Internet services to small and midsized businesses. It rang up $182 million in revenue and a loss of $49 million last year.

Farpoint competes with incumbent telephone companies such as Bell Atlantic, US West and GTE Corp.

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